SEC Scores $1.1M Court Victory After Crypto Scam Defendant Fails to Respond

The US Securities and Exchange Commission (SEC) has secured a $1.1 million judgment in a crypto fraud case after the defendant failed to respond to the agency’s lawsuit.

A Georgia federal judge entered a default judgment on June 3 against Keith Crews, who was accused of running a fraudulent crypto scheme and did not appear to defend himself in court. The SEC had filed the suit in August 2023.

Judge Tiffany Johnson ordered Crews to pay over $1.1 million, including $530,000 in disgorged profits, nearly $51,000 in prejudgment interest, and a $530,000 civil penalty.

Court Permanently Bars Crews From Future Securities Law Violations

The ruling also permanently bars Crews from future violations of federal securities laws.

According to the SEC’s complaint, Crews operated the scheme through two companies, Four Square Biz and Stem Biotech, between October 2019 and May 2021.

The agency alleged he raised at least $800,000 from around 200 investors by selling a so-called crypto asset security named “Stemy Coin.”

The SEC said many investors were recruited through personal ties in African-American and church communities.

Regulators accused Crews of falsely promoting Stemy Coin as being backed by stem cell technology, gold, and other hard assets.

He also allegedly claimed his firm had operational labs, products, and established partnerships with medical professionals.

In reality, the SEC found that none of these claims were true. “Crews and his entities had no existing stem cell technology, products, or operations, there was no partnership with the claimed entities,” the agency stated in its filing.

The case involved violations of several federal securities laws, including fraud and registration provisions of the Securities Act and Exchange Act.

This ruling marks a rare crypto-related court win for the SEC, which has scaled back enforcement efforts under the Trump administration this year.

SEC Shifts Its Stance on Crypto

The SEC, under the current administration of President Donald Trump, has signaled a move toward a more crypto-friendly regulatory framework for digital assets.

Trump, who emphasized a pro-crypto stance during his campaign, appointed former SEC Commissioner Paul Atkins to lead the agency.

Atkins is expected to take a markedly more accommodating approach to blockchain sector regulation compared to his predecessor, Gary Gensler, who was known for his aggressive enforcement-driven regulatory strategy.

The agency has already dropped its lawsuits against Coinbase and Cumberland DRW earlier this year, and a separate investigation into Uniswap Labs closed in February without enforcement action.

The agency also closed its investigation into CyberKongz, a prominent Ethereum-based NFT and gaming project, with no enforcement action taken.

More recently, the SEC announced it would not pursue further legal action against Richard Schueler, better known as Richard Heart, the founder of Hex, PulseChain, and PulseX.

The post SEC Scores $1.1M Court Victory After Crypto Scam Defendant Fails to Respond appeared first on Cryptonews.